Corporate Tax Reform
Tax on Corporations as a Revenue Source
The corporate tax is the third-largest source of Federal revenue, but its importance as a revenue source has diminished considerably over time. Magnitude and Historical Pattern Despite concerns expressed about the size of the corporate tax rate, current corporate taxes are extremely low by historical standards, whether measured as a share of output or based on the effective tax rate on income. In 1953, the corporate tax accounted for 5.6 percent of gross domestic product (GDP) and 30 percent of Federal tax revenues. In recent years, the tax has fluctuated at around 2 percent of GDP and 10 percent of…
